UREX gets ready for sector trading

Derivatives exchange EUREX, which launched futures based on the IPD UK All-Property index two years ago, is planning to add sector trading shortly. Contracts on the UK retail, office and industrial sectors will be introduced first. EUREX director Stuart Heath said: “We have the ability to go into sectors and initiated that process at the start of 2011. “We have to be confident that we can manage the risk and that there is sufficient information on historic trading prices, as well as potential liquidity.”

He said he hoped to go to the EUREX board for a decision shortly and that contracts could be listed by late summer. Property derivatives have developed as an off-exchange market with most participants trading bilateral swaps, or notes, directly with a counterparty. EUREX volumes have been low, but it expects to benefit from a legislative push to mitigate counterparty risk by clearing derivatives through exchanges.